SHIN NIPPON BIOMEDICAL LABORATORIES, LTD.

Business Details

A drug development support business that receives outsourced non-clinical studies (safety, pharmacology, and pharmacokinetic studies) and clinical trials from pharmaceutical companies and others. The Non-Clinical Business is the largest in Japan and ranks among the world's top two groups in terms of track record using NHPs (non-human primates). The Clinical Business is primarily conducted through SNBL PPD, a joint venture with PPD, focusing on international multi-regional clinical trials. The Company differentiates itself by addressing new drug discovery modalities such as nucleic acid drugs, next-generation antibody drugs, and gene therapy.

Recent Overview

Order backlog and orders received hit record highs, but revenue and profit declined due to the timing shift of large-scale studies

In FY2026 (ending March 2026), CRO Business revenue was ¥31,277 million (down ¥317 million, or 1.0%, year on year), and operating income was ¥6,909 million (down ¥349 million, or 4.8%, year on year). The main cause was the shift of revenue recognition for several large-scale studies to FY2027 (ending March 2027). On the other hand, Non-Clinical Business orders received reached a record high of ¥35,728 million, and orders from European and U.S. customers expanded 35.2% year on year to ¥13,225 million. The order backlog also reached a record level of ¥40,920 million. The Company obtained preferred vendor certification from one global mega-pharma company, and, together with one major domestic pharmaceutical company, has now concluded preferred contracts with a total of four companies. SNBL PPD's FY2025 revenue was ¥20,593 million (down 6.0% year on year), maintaining a high operating margin of 44.3%.

Key Products

Growth Drivers

• Increasing demand for NHP studies accompanying the full-scale advancement of research and development in new drug discovery modalities (nucleic acid drugs, next-generation antibody drugs, peptide drugs, gene therapy, cell therapy, regenerative medicine, etc.)
• Competitive advantage in an environment where overseas NHP procurement is difficult, owing to the Company's in-house NHP breeding and supply system (unique among CROs worldwide)
• Expanding orders from European and U.S. customers (FY2026 European and U.S. orders received rose 35.2% year on year to ¥13,225 million, with an overseas order ratio of 43.4%)
• Expansion of a stable order base through preferred contracts concluded with multiple pharmaceutical companies (preferred vendor certification obtained from four domestic companies and one global mega-pharma company)
• Strengthening capacity to serve European and U.S. customers through the new construction of the 'EU Building,' an NHP research facility specializing in EU-standard large breeding cages (total investment of approximately ¥10 billion, scheduled for completion in November 2027)
• Capturing new demand through MPS contract services (the first among domestic CROs) and the introduction of new LC-MS/MS units for bioanalysis
• Shortening lead times and enhancing customer value through AI-based automated final report generation (full-scale implementation development to begin in May 2026, with implementation planned for March 2027)
• Synergy effects from the tender offer for Ina Research (SNBL Ina Research Center), including drug dependence study contract services and diversification of the customer base
• SNBL PPD's FY2025 orders significantly exceeding the prior year, expected to contribute to an increase in equity-method income in FY2027 (ending March 2027)

Risks

• Risk of quarterly and annual performance fluctuations due to the timing shift of revenue recognition for large-scale studies (multiple large-scale studies in FY2026 shifted to the following fiscal year)
• Cost pressure from strategic large-scale upfront investments, including significant workforce reinforcement, laboratory facility expansion, establishment of a domestic NHP breeding system, and DX promotion (FY2027 capital expenditure plan of ¥11,086 million)
• Procurement risk for laboratory NHPs (risk of supply disruption due to import regulations, infectious diseases, Middle East conditions, etc.)
• Costs and burdens associated with maintaining compliance with overseas standards and legal regulations (such as GLP)
• Increasing new entrants into the CRO industry and intensifying competition with existing competitors
• Foreign exchange risk (with the overseas order ratio rising to 43.4%, the impact of yen appreciation on orders received and revenue is expanding)
• Risk of fluctuation in equity-method income at SNBL PPD due to changes in order forms from major customers and yen appreciation